Import - Export
Policy of India
• Why do we need export,brief history
• Exim policy ,objectives
• Export Promotion Measures
• Import Control in India
• Pre 90’s Exim Policy of India
• Post 90’s Exim Policy of India
Why do we need export
• Export means trade across the political
boundaries of different nation. No Nation is
self sufficient and had all the goods that it
needs. This happens because of climatic
variation & unequal distribution of natural
resources. As a result, countries all over the
world have become interdependent, which
necessitated foreign trade. A developing
country like India with its fast growing
agricultural production to keep pace with the
population to keep pace with the population
growth and growing Industrial infrastructurewww.StudsPlanet.com
• needs high-import and this can be sustained only
with fast export growth. To meet the oil import
bill, export is unavoidable. Thus, it is evident that
export promotion continues to be a major thrust
area for the government. Several measures have
been under taken in the past for improving export
performance of the country. In India, Govt. has
come out from time to time with various policies
on foreign trade to promote export thereby
increasing the “Foreign Exchange Reserve”.
These policies are termed as “Exim Policy”
.• Import export act was introduced by gov
during second world war and it lasted for
around 45 yrs and in June 1992 this act was
superceded by the Foreign Trade
(Development & Regulation Act), 1992. .
The basic objective of this new act was to
give effect to the new liberalized export and
import policy of the Govt. till 1985 annual
policies were made but from 1985-92, three
yr policy was made and then 5 yr policy was
made coinciding with 5 yr plans 1992-97,
What is Exim Policy?
• It contains policies in the sphere of Foreign
trade i.e. with respect to import & export
from the country and more especially
export promotion measures, policies and
procedure related there to.
• Export means selling abroad and import as
bringing into India, any goods and services
Objective of Exim Policy
• Accelerating the country’s transition to a globally
oriented vibrant economy with a view to derive
maximum benefits from expanding global market
• Stimulating sustained economic growth
• Enhancing the technological strength and
• Encouraging the attainment of internationally
accepted standards of quality
• Providing consumers with good quality products
and services at reasonable prices.
General provisions regarding export import
• Exports and Imports free unless regulated
• Compliance with Laws
• Interpretation of Policy
• Exemption from Policy/ Procedure
• Principles of Restriction
• Restricted Goods
• Terms and Conditions of a Licence
• Importer-Exporter Code Number
• Exemption from Bank Guarantee
• Clearance of Goods from Customswww.StudsPlanet.com
EXPORT PROMOTION MEASURES
• Policy measures
• Institutional set up.
• Import Facilitation for Export Production.
• Cash subsidies.
• Fiscal Incentives.
• Foreign Exchange Facilities.
• Export incentives
• Export production units
Import Facilitation for Export
• Export Promotion Capital Goods Scheme
• Special Import Licences
• Duty Free Licences under Duty Exemption Scheme
• Duty free licences are issued as :
• (1) Advance licence
• (2) Advance Intermediate licence.
• (3) Special Imprest licence.
• (4) Licence for jobbing, repairing etc. for re-
• (5) Licence under export production programme.
• (6) Advance Release Order.
• (7) Back to Back Inland Letter of Credit.www.StudsPlanet.com
• Exemption from payment of central excise duty &
simplified procedure for clearance.
• Exemption from sales tax
• Exemptions & deductions under income tax
• Duty draw back Scheme (DDS)
• Cash Compensatory Support ( CCS )
• International Price Reimbursement Scheme
Import control regime
• 1956-57, restrictions on imports started as lot of imports
were there as such gov even had to import foodgrains for
• Imports were classified into
• Banned items ,Canalised items ,Restricted items, OGL
• In 1966 ruppee was devalued by 36.5% By devaluation
gov expressed the hope that the devaluation would
lead to expansion in export earnings as indian goods
will become cheaper in internatinal market on the
other hands import would decline as price of
imported goods would increase.
• Because of a rigid itemization of permissible
imports, an element of inflexibility in the pattern of
utilization of imports was introduced. The
transferability of licenses among same and
different industries was not permissible. This gave
rise to an expanding black market in import
licenses. Therefore, the import allocation system
was so designed as to eliminate the possibility of
all competition, either domestic or foreign. The
Govt of India has liberalized the import regime
from time to time. At present, practically all
controls on import have been lifted. Under the new
EXIM policy 2002-07.
Comparison of Pre 90’s & Post
90’s Exim Policy
1948-51 650 647 -3 Excess of Import due to-
•Pent-up demand of war.
•Shortage of food & raw material due to
•Import of capital goods due to starting
of hydro-electric & other projects.
1951-56 730 622 -108 Trade deficit was largely due to
programmes of industrialization which
gathered momentum and pushed up the
imports of capital goods.
No improvement in exports.
1956-61 1080 613 -467 Excess of import due to setting of steel
plants,heavy expansion & renovation on
railways & modernization of many
Export lower than occur in second plan
which shows that export promotion drive
did not materialize.
1961-66 1224 747 -477 Excess of import due to-
•Rapid industrialization needs capital
goods as raw material.
•Defence needs had increased due to
aggression by China & Pakistan.
•Need of foodgrains due to failure of
crops in 1965-66.
5775 3708 -2067 Devaluation was resorted to essentially-
•To reduce volume of import.
•To boost export.
•Create favourable balance of trade and
balance of payment.
1969-74 1972 1810 -162 As a consequence of import restriction
policies with vigorous export promotion
measures ,during 1972-73 the country
had favourable balance of trade for first
time since independence.
But several international factors pushed
up the price of petroleum
product,steel,fertilizers etc.results low
magnitude of trade balance.
1974-79 5540 4730 -810 Significant increase in export during
every year of this period.Export of
coffee,tea,cotton fabrics etc.recorded
substantial increase in this period.
But,Janta Government followed policy of
haphazard import liberalization results
decline trade balance from 1977-78.
1980-85 14,986 9051 -5935 Decline in POL imports was more than
by a big hike in non-POL imports as a
consequence of import liberalization.
Consequently, huge trade balance.
1985-90 28,874 18,033 -10,841 Huge trade balance compelled the
government to approach the World
Bank/IMF for loan.
The government was also forced to
apply brakes on the licensing policy of
1990-92 45,522 38,300 -7222 In 1990-91,push was given to
export,but as a consequence of Gulf war
government failed to curb imports.
In1991-92, government introduced
number of measures in trade policy
allowing exim scripts,abolishing cash
compensatory support(CCS) schemes as
also a two-step devaluation of the
rupee,but fail to boost up export.
1992-01 140740 118252 -22,488 In 1992-01,slow down in exports due to-
•Depressed nature of world markets.
•Saturation of developed countries market
for electronic goods which are dynamic
•Increased protectionism by industrialised
countries in area of textile and clothing.
•Increasing competition from China &
•India underestimated the impact South-
East Asian crisis
•Non-Tarrif barriers have been created by
developed counties to slow down Indian
•In 2000-01 export was largely due to
rupee depreciation along with further
trade liberalization,more openness to
foreign investment in EOU sectors ike IT.
Rise in imports in 2002-03 was broadly
based on oil imports,food &allied
products(edible oil),capital goods.
Exim policy 2003-04gave massive thrust
to exports by
•Duty free import facility for service
sector upto earning 10lakh foreign
•Liberalization of Duty Exemption
Besides,all these measures trade balance
in 2003-04 are high due to mainly on
imports of POL products
more.Currently, almost two-third of
country crude oil requirements are
imported.Besides import of POL, import
of non POL items shot up by 17%
in2002-03 to 26.2%in 2003-04.
Trade - On an All time High India’s total external trade in goods and services grew
by 41.5% in H12005-06 to US $ 153 billion. This is
expected to go up to US $ 310 billion by the end of this
year. This was just over US $ 74 billion in 1994.
The trade to GDP ratio, calculated at current prices, has
risen to 29.36% in 2004-05 from 18.28% in 1993-94.
more Open than
Exports have grown to US $ 57.05 billion during April-
November 2005-2006. They are expected to grow at
26% during the current year to US$ 100 billion.
Non-oil imports grew at over 28% during April -
September 2005 led by demand for capital goods.
Service Exports grew by 71% in 2004-05. India's IT-
ITES exports have shown robust growth and are
expected to grow by 32% this year to US $ 23 billion.
Source: Reserve Bank of India
Trade Trends ..
India Exports - Goods and Services
India's Foreign Trade
1984 1994 2004-05 2005-06 (A)
Exports Imports Total Trade
Share of Asia
96-97 97-98 98-99 99-00 00-01 01-02 02-03 03-04 04-05
Asia Non Asia
Source: Reserve Bank of India
India Capital Good Im ports
96-97 97-98 98-99 99-00 00-01 01-02 02-03 03-04 04-05
Capital Goods Imports Total Imports